Trouble Temporarily Ahead

With the consultation period for the Temporary Agency Workers Directive (TAWD) ending on 31 July, the final shape of this much discussed piece of legislation is still very much up in the air.

Behind the scenes, the various organisations representing the
recruitment industry are hard at work lobbying the government and
other interested parties, such as the CBI (Confederation of British
Industry) and the TUC.

While all of the trade bodies representing the industry have
signed up to supporting the main aim of the directive to protect
agency workers, and particularly vulnerable ones, each one argues
that its proposals will best achieve this. In its consultation
document, BERR (now the Department for Business Innovation and
Skills) proposes excluding those who are genuinely self-employed,
those working through their own limited company or employed on
managed service contracts. BERR intends to include workers
contracted to an umbrella company.

However, Kevin Barrow, a partner at law firm Blake Lapthorn,
whose company has been working with the Association of Professional
Staffing Companies (APSCo) on TAWD, argues that since the stated
purpose of the directive is to protect vulnerable agency workers,
it is incompatible for it to include workers who are highly
qualified and generally paid well above minimum wage levels.

Professional workers, who operate through
umbrella companies and have their own limited company, are not
vulnerable workers, he argues, and clearly do not require the
protection of TAWD.

It is believed that the best way to define who and who isn't a
vulnerable worker is on the basis of what they earn. Therefore it
is suggested by several parties that any workers earning three or
more times the national minimum wage should be excluded from the
directive. This case would clearly see a system that is not based
on whether someone is self-employed or not, which is complicated,
but on a simple test based on what is paid.

A matter of ethics could well enter the arena, however, with
arguments that the government's proposal to exempt limited company
contractors will not have the desired effect of protecting
vulnerable workers could well worsen the situation. The danger is
that employers or unethical agencies could force people who should
never be running a business on their own account; such as cleaners,
into becoming limited company contractors against their will. One
reason for agencies pressurising workers into this is because they
would rather not have the responsibility of them on the payroll and
find it far simpler for contractors to invoice them directly.

However, there are arguments that oppose these ideas with some
industry specialists claiming that excluding workers on basis of
their earnings is simply not possible under the directive because
TAWD applies to anyone who comes under the definition of an agency
worker, and there is no provision under the directive to exclude
anyone on the basis of what they earn. Regardless of earnings, a
worker who is assigned to a user undertaking to work under their
direction or control, falls under the definition of being an agency
worker.

An alternative solution, posed by Adrian Marlowe, MD of
recruitment industry legal consultants Lawspeed, is to have a
two-tier derogation period before the directive would apply. The
first derogation period of 12 weeks would be for workers earning up
to 1.5 times the minimum wage. The second of 12 months would apply
to workers earning more than 1.5 times the minimum wage. The
advantage of this proposal is that it would reduce the likelihood
of employers terminating temporary workers after 12 weeks to avoid
granting them the additional rights which would take a lot of
agency workers out of the danger zone.

However, Tom Hadley, director of external relations at the REC,
says that legal opinion received by the REC is that there's nothing
in the directive that would allow workers to be exempted on the
basis of their earnings. He claims the proposal to exempt workers
on the basis of their earnings has no support from recruiters.
Hadley says the only way this idea could be progressed is if the
discussion on the 12-week derogation period between the UK social
partners, the TUC and the CBI were to be reopened but does not
believe this will happen.

The REC's view is that while genuinely self-employed workers
should be exempt, which would take out a lot of IT contractors and
interim managers, the directive has got to work for everyone and
not depend on earnings.

It is also a concern that under the BERR proposals workers who
work though umbrella companies would come under the directive.
Many, such as Crystal Umbrella, provide a very good service to
contractors. Properly administered, with proper employment of
workers should mean umbrella exclusion.

With the draft regulations for the directive due to be completed
towards the end of the summer, time is running out for the industry
to influence TAWD.

THE AGENCY WORKERS DIRECTIVE: MAIN
OBJECTIVES

The key objective of the Temporary Agency Workers Directive (TAWD)
is the protection of temporary workers through ensuring they
receive at least the same treatment as if they had been taken on
directly by the hirer in the same job.

The main areas where equal treatment applies are:

duration of working time

basic pay, including overtime

holiday entitlement

The directive only applies to temporary agency workers after
they have been in a job for a 12-week qualifying period.

The earliest the directive is likely to appear on the UK's
statute books is October 2010.